What Afghanistan needs: job creation

ByGraciana del CastilloFebruary 10, 2010

New York — President Obama is leading two surges this year. One is for Afghanistan, where US troops are trying to secure the war-torn country. The other, in the form of business tax credits and government spending, is for the beleaguered US economy.

What do Afghanistan and the US economy have in common? Both need job creation to succeed.

While Democrats and Republicans debate the best ways to create job opportunities in the United States, the debate over how to stabilize Afghanistan has focused on military and security issues, to the neglect of economic ones.

Military operations unaccompanied by the reintegration of former insurgents and other armed groups have failed in the past – in Afghanistan and elsewhere. A shift in US strategy to focus on job creation and effective reintegration could keep Afghanistan from sliding into what it was before 9/11: an Al Qaeda sanctuary.

The best chance for US forces to start coming back home in the summer of 2011 as planned is if they can persuade a significant number of Taliban and other armed militants to abandon the insurgency.

Doing so requires a two-pronged strategy.

First, we must severely curtail the drug trade that finances these armed groups. Attractive alternative employment incentives could entice farmers away from producing poppies into producing legal crops or engaging in light manufacturing and services. With the price of opium plummeting, this seems like an ideal time to adopt a policy to compensate farmers for the switch. A combination of credit, subsidies, and trade preferences should be put in place for this purpose.

Second, we must identify and finance a number of venues through which Taliban and other groups can reintegrate into society and engage in productive activities once they give up their arms.

Such reintegration is not impossible. El Salvador has done it. So have several African countries. In Afghanistan, former combatants could be given the option to join the national security forces, run for political office, work for any number of legitimate businesses, or set up their own microenterprises.

Finding new jobs for former militants and poppy farmers will be difficult enough, but Afghanistan has another major employment challenge on the horizon: creating jobs for the millions of young people who are about to enter the labor force.

Afghanistan's population is one of the youngest in the world. Nearly half of Afghans are younger than 15 years old. Thanks to efforts by private citizens, nongovernmental organizations, and the international community, many of these children and teens – including girls – are being educated. When they graduate, they will struggle to enter a labor market in which there is roughly 40 percent unemployment. The alternative may be to join the insurgency or leave the country. Both options will make rebuilding Afghanistan that much harder.

Automatic development?

In a White House briefing just before Mr. Obama's announcement of the military surge, Michèle Flournoy, undersecretary of Defense for policy, mentioned that Afghan leaders wanted the US to help them "build security" in the country since once security was achieved, "the rest will follow."

Actually, the rest will not follow. Security is a necessary but not a sufficient condition for job creation. Good security did not lead to job creation in Afghanistan in the mid-1970s. Nor has it led to job creation in New York today. When confronting a crisis, policymakers must often adopt extraordinary measures. To help get 15 million jobless Americans working again, Obama is pushing for an aggressive jobs bill, despite a dismal deficit.

Unemployment in Afghanistan is far worse – and the response should be far more aggressive. Yet so far funding has been misdirected. Of $40 billion in US-provided assistance to the country since the start of the war, roughly half supported local security forces, while the other half bolstered general economic and social programs. Investment and job creation must attract a growing share of funding going forward. While $20 billion in general support for these programs may sound like a lot, it pales next to the $210 billion spent by the Department of Defense on the Afghan war so far.

Reconstruction zones

Aid and private investment should go hand in hand. With Afghans holding an estimated $16 billion abroad and lots of money under the mattress, investment opportunities should be created at home both for Afghans and for foreign investors. These opportunities could include the creation of "reconstruction zones" for assembling, processing, and exporting products made by low-skilled workers under preferential trade arrangements, public-private infrastructure development projects, and start-ups.

A larger investment in job creation as part of an effective rebuilding strategy could reduce the enormous cost of financing military operations in Afghanistan. This would not only have a welcome fiscal impact on the US budget, but more important, it would allow American troops to come home sooner.